Self-Directed IRA

A self-directed IRA account or a, "Checkbook Individual Retirement Account", is a retirement account that requires the account owner to invest earnings on behalf of the retirement plan. Self-directed IRA accounts are normally not restricted to a select group of asset types and most self-directed IRA custodians will permit clients to invest in most investments acceptable by the IRS. Generally the custodian or trustee will manage the assets, make transactions and keep records relevant to the account, from how to manage the tax obligations to regulations and prohibited transactions. They perform other administrative tasks and responsibilities on behalf of the owner of the self-directed IRA for the term of the IRA account. It is imperative that individuals interested in self-directed IRAs work closely with a qualified and experienced IRA custodians. Regulations imposed by the IRS require that a qualified trustee or custodian hold the IRA assets on behalf of the IRA holder. Self-directed IRA accounts permit investors to diversify their portfolio outside of stock market investments and into less risky and more lucrative investment options.

Do you need help in setting up a self-directed IRA account? Contact an experienced CPA today and set your retirement funds in the right direction.

Some investment options permitted under the IRS regulations include: domestic and foreign real estate, mortgages, loans/notes, foreign currency exchange, stocks, mutual funds, personal business, franchises, partnerships, tax deeds, and tax liens. Many individuals choose to invest IRA funds into real estate for the potential of a higher rate of return, in hopes of hastening the value of their IRA. This may include: apartments, single family homes, multi-family homes, commercial properties and raw land. This type of IRA account can afford a new or existing business with a valuable source of capital. The investor does not incur additional debt or monthly payments, and the profits continue to accrue on a tax deferred basis. Self-directed IRAs advance the investors opportunities to diversify their IRA portfolio, by permitting a wide range of investment options.

If the IRA owner is younger than 59.5, the account will be subject to an early withdrawal penalty of 10 percent. Self-directed IRA accounts may permit earnings to be placed into a checking account, making the funds more liquid. This type of retirement fund gives investors checkbook control of earnings, permitting them to invest how they choose.

Two types of traditional IRAs:

• Deductible – allows you to deduct all or part of your contributions from your taxable income.
• Nondeductible - you may be able to entirely or partially deduct your contribution if your adjusted gross income qualifies and you have another retirement plan at work.

Contributions limits:

• Age 50 and younger is $4,000.
• Age 50 and above is $5,000.
• Single/head of household your AGI cannot surpass $60,000.
• Married and filing jointly your AGI cannot surpass $85,000.

You may qualify for a full or partial deduction if you are married and file jointly and your AGI is below $160,000 and you're not covered by a retirement plan, but your spouse is. You may be eligible to contribute to a Roth IRA if you are single and your AGI is below $110,000 or $160,000 if you're married filing jointly. A nondeductible IRA is a viable option if you are not eligible for a deductible IRA, your contribution will not be deductible but your savings will grow tax-deferred.

Do you need help in setting up a self-directed IRA account? Contact an experienced CPA today and set your retirement funds in the right direction.